There are real estate investors out there who are striving to be their best. Yet there are a lot of real estate investors who are not even sure what they should be good at. This was me, more than 10 years ago. As I did my due diligence and pondered the idea of investing in real estate, I struggled to understand what my core competency was going to be so I could excel. Most importantly, I wondered to myself, “How am I going to be the best version of me as a real estate investor?”
I see a lot of articles and podcasts about discovering the best version of oneself. This is so relevant to real estate investors—whether part-time, full-time or even those embarking on the real estate adventure for the first time. I’m sure you’re wondering, “What do I have to do to be successful at this?” There is just not one simple answer. There are so many different competencies a real estate investor must have to ultimately build, master and succeed.
Determining what you should be focusing on can be difficult. Based on my 10 years of experience as a HomeVestors franchisee in the Dallas-Fort Worth area, I’ve learned hindsight is 20/20. And I now realize in order to be the best version of me, as a real estate investor, there are three core competencies that drive the success of my business. I focus on them daily in order to become proficient. First is the ability to generate leads, i.e. distressed sellers who are ready to sell for cash. Second is the ability to become the best buyer you can. And third, which is so critical, is the ability to become the best seller possible.
Now let’s look at each of those a little more closely.
Create the Best Lead Generator Possible
The reason I start with this one is no coincidence. By far I see this as the most critical competency or proficiency you’ve got to build within yourself and your business. It is crucial to gain access to sellers of residential real estate who need you as a real estate investor.
Sellers need your ability to purchase their house for cash, as-is, and quickly. There is a whole market of sellers out there with those needs who are searching for buyers who have these capabilities. That’s what creates the market for real estate investors like you and me. We build our businesses to become successful and, most importantly, to solve the problems of sellers. We provide solutions they need and a service they need. These are the individuals who may not be able to sell their home on the retail market with a Realtor, with showings, open houses, inspections, appraisals and surveys. These sellers have a different set of needs, and the retail real estate market solution does not fit. This creates the market for you as an investor. You need the ability to find individuals and those properties.
It’s quite similar to the idea of starting a business based on a model of buying widgets off the retail shelf at the retail price, then turning around and trying to sell them on the internet at a mark-up. You’ll never sell those widgets. Everybody can get them off the retail shelf at the retail price. Buyers are not likely to pay a premium for the exact same product. This is the same with real estate.
You can’t depend on buying your real estate strictly off the MLS which is, essentially, the retail market for real estate in the United States. There are sometimes deals on the MLS, but they can be difficult to find or are few and far between. Investors do purchase properties off the MLS, but it would be a flawed assumption to build a real estate investment business model based on buying all your properties from there. You may find a good deal or a “sale” occasionally, but in order to scale a business, you will have to generate leads. So, buy real estate at discount prices, and provide services to a seller. In return, you can acquire properties at prices you’re able to make money on, no matter your chosen exit strategy.
Be the Best Buyer You Can
Now you have the lead generation engine in place, let’s talk about being the best buyer you can be. It’s great you’ve got leads coming in. But if you’re not able to follow those leads and convert them into purchases, you’ve got a problem.
You must be able to calculate the after-repair value – ARV – of those properties using comps. You’ve got to be able to assess repairs, what a house needs and what it’s going to cost you. Once you know the market value of the property and repair costs, you’ve got to be able to calculate the offer. An offer that includes your profit margin, the repairs and at the same time meets the objective of the seller. But you must be able to present the offer in such a way that the seller is satisfied and agrees.
These are some of the tactical aspects of becoming a great buyer. If you want to discover your true core competency as a real estate investor, it comes down to your ability to solve the problems of the seller. Identify where the seller’s pain is, address it and solve it. Meet the seller’s objective when it comes to buying his or her property. Sellers might be in a hurry. They may have a financial issue to deal with, or they may have significant repairs on the property. There are many reasons people are willing to sell their real estate off-market to investors at discounts. Create purchase solutions for them that satisfy their needs. They called you for a reason; they see you as a solution.
Be the Best Version of You
The last core competency is to be the best version of you or the best real estate investor you can be. This is your ability to sell these properties. Once you generate the leads and convert them to purchases, it’s time to sell them. Regardless of whether you are fixing-and-flipping these properties, selling on the retail market or wholesaling or renting them, put on your sales hat. You’ve got to be proficient and confident, no matter where you are selling these properties. The key here is when you purchase properties, make sure you have your exit strategy in mind. And based on your chosen exit strategy, be able to develop the best solutions for the seller. This way you will have the best solutions in the forefront of your mind and in turn you’ll be the best salesperson you need to be when it comes time to use your exit strategy. And that’s all part of being the best seller you can be.
We talked about being an excellent lead generator. We talked about being the best possible buyer you can be and we talked about the best seller you can be. Based on my experience, many times with the part-time or new investor, it is hard to know what it is we’re supposed to be best at. So, focus on your lead generating abilities, focus on your buying competencies and become a proficient seller. In turn, you will be the best version of yourself, and the best real estate investor you can be.
You can listen to Kevin Guz’s by clicking here.
About the Author
Kevin Guz is a Dallas, Texas-based residential real estate investor with more than 10 years of investing experience. He owns a HomeVestors (or “We Buy Ugly Houses”) franchise as well as the Clear Key companies, which focus on residential real estate wholesaling, rental property management and self-storage leasing. He also is a licensed real estate agent in the state of Texas. He enjoys sharing his ongoing personal experiences, perspectives and learnings from his start as a part-time or “weekend investor” and full-time corporate professional through his ultimate transition to a full-time real estate investor and business owner. You can listen to his podcasts at http://www.blogtalkradio.com/kevinguz.